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The importance of the Doha Development Agenda on trade and investment of textiles and clothing sector after quota elimination. Conference: The Future of Textiles and Clothing after 2005 5-6 May, 2003. Kazu Toyoda Director General for Manufacturing Industries

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The importance of the Doha DevelopmentAgenda on trade and investment of textiles and clothing sector after quota elimination

Conference:

The Future of Textiles and Clothing after 2005

5-6 May, 2003

Kazu Toyoda

Director General for Manufacturing Industries

Ministry of Economy, Industry and Trade

Government of Japan


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Japan’s fundamental idea on trade and investment of textiles and clothing sector after quota elimination

MFA quota elimination post 2005

A world-wide expansion of trade and investment can be expected. However…

High tariff rates

Non-tariff barriers (NTBs)

Uncertain environment for investment

Abuse of anti-dumping (AD) measures

Remaining problems

Not only North-South trade, but also South-South trade will not fully develop.

Trade would be seriously disturbed by the abuse of anti-dumping measures.

Due to uncertainty, developing countries are less recipient of investment.

Improvement of market access → harmonization by sectoral approach

Clarification of anti-dumping rules

Establishment of investment rules

Proposed solutions


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textiles and clothing sector after quota eliminationJapanese textile market, where imported products occupy 70%, has become one of

the most liberalized among the major countries as the result of the utmost tariff

reduction during the UR negotiations.

・Japan has never invoked MFA quotas nor transitional safeguard measures under

the ATC.

Japanese textiles and clothing trade

Import penetration ratio of Japanese textile market(2001)

○67.4% (based on weight)

○33.0% (based on value)

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Tariff rates of main items from selected countries textiles and clothing sector after quota elimination

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The importance for developing countries textiles and clothing sector after quota elimination

/2000

The amount of textile consumption market of all developing countries

The amount of textile trade (intra-developing countries)

About $ 700 billion

1990 $ 46.5 billion

×1.4

1999$ 81.6 billion

EU+JAPAN+USA:$ 500billion

(About 20% of world textile trade)

Developing countries could reap income gains of over $500 billion from the full trade liberalization. This will lift more than 300 million people above the poverty.

(World Bank, Global Economic Prospects, 2002)

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The importance for LDC (least developed countries textiles and clothing sector after quota elimination)

LDC can enter textiles and clothing sector, especially in sewing which is highly labor-intensive.

- a case study - Bangladesh

The clothing industry of Bangladesh, mainly sewing, has dramatically developed past 10 years and become a major exporter.

・Shares of clothing in total export have doubled (or about 76% of total export).

・Value of clothing export has increased about seven times.

(Source - Bangladesh Bureau of Statistics)

・GDP rates continue to grow at average 5% over the past 10 years.

$ 31 billion in 1991 → $ 47 billion in 2001

The Improvement of market access provides export opportunities in textiles and clothing trade.

5


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Overview of proposals submitted in textiles and clothing sector at the WTO market access negotiations

Swiss formula. Elimination all tariffs by 2015.

Although “zero-for-zero” was proposed for other sectors, there is no proposal for sectoral approach on textiles and clothing sector.

Developed countries: individual reduction formula.

Developing countries: average of coverage products.

“zero-for-zero” and “harmonization”: voluntary basis.

Non-sectoral

approach

USA

Ten developing countries(INDIA etc)

Average target tariff reduction formula

Line-by-line basis reduction formula

Sectoral

approach

E U

JAPAN

Separate from average target tariff reduction formula, sectoral approach & harmonization for textiles and clothing sector.

In the “compression mechanism” proposal, “all Members ...deeper cuts for textiles, clothing, and footwear… these tariffs within a narrow common range as close to zero as possible.”

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Initiation of anti-dumping (AD) measures targets textiles and clothing sector (so called “double jeopardy”)

The textiles and clothing sector accounts about 10% of the total initiation of anti-dumping measures to developing countries.

Phasing-out of MFA quotas is likely to lead to abuse of anti-dumping measures after the end of 2004.

anti-dumping measures initiated during the period, 1/1/1990-31/12/1999

Targeting developing countries: 1,603 cases

Targeting developed countries: 880 cases

source: WTO Rules Division database

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International collaboration in textiles and clothing sector and clothing sector (so called

・International division of labor in textiles and clothing sector can be developed, based on competitive advantage. However, there exist some impediments (high tariffs, limited flow of investment, abuse of anti-dumping measures etc.)

・Each developing country can receive substantial benefit by elimination of above mentioned impediments.

A case of high quality cotton shirts

Planning / design

Japan

Spinning

India

Dyeing / finishing

Japan

Fabrics

Indonesia

Dyeing / finishing

Malaysia

Sewing

China / Cambodia

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100 MILLION YEN and clothing sector (so called

100 MILLION YEN

FY

The importance of Foreign Direct Investment (FDI) to textiles and clothing sector of developing countries

- case 1 -

The companies in Asiawhich the Japanese textile companies invested export about 50~60% of all their production to the other nations (including to Japan). 


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The importance of Foreign Direct Investment (FDI) to textiles and clothing sector of developing countries

- case 2 -

FDI by Japan and USA in the textiles and clothing sector has been downward trend since late of 1990’s.

An example - FDI by Japan and USA in the textiles and clothing sector in 1990’s.

To promote FDI in the textiles and clothing sector, the establishment of WTO investment rules is essential.

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